CapGemini posts better-than-expected sales

9th November 2004, Comments 0 comments

PARIS, Nov 9 (AFP) - French computer services group CapGemini reported Tuesday a better-than-expected 20.6 percent jump in third quarter sales.

PARIS, Nov 9 (AFP) - French computer services group CapGemini reported Tuesday a better-than-expected 20.6 percent jump in third quarter sales.

Third quarter sales were EUR 1.613 billion (USD 1.498 billion), up from 1.337 billion a year earlier, translating to a 12.7 percent increase on a constant currency and asset structure basis.

Analysts had expected EUR 1.547-1.6 billion in sales in the period.

Outsourcing was the major driver in growth, it said, and would total around 35 percent of group sales in the second half of the year.

Third quarter bookings for the group were EUR 1.276 billion, up six percent from the year earlier period.

The company's project and consulting division sales were EUR 988 billion, down 11 percent on a constant currency and structure basis after a 22 percent drop in the first half.

Chief executive Paul Hermelin said during a conference call that he expected the company to achieve an operating margin of two percent in the second half of 2004.

CapGemini in September had forecast an operating margin of two-three percent in the second half of the year. Hermelin blamed the lower forecast on a slower-than-expected recovery in the US.

He also said the company had launched a plan aimed at cutting costs of around EUR 120 million by the end of this year.

Capgemini would slash costs by cutting a further 1,000 jobs, after 400 in the first half of the year, and finance director Nicolas Dufourq said related costs would likely cut fourth quarter profits by "no more than EUR 50 million."

In mid afternoon trading, Capgemini shares were up EUR 1.83 or 8.81 percent at EUR 22.61, while the CAC-40 index of leading nudged 0.02 percent at 3,777.81.

"The key thing is that they've talked about profit for the first time.

Previously they've talked about increasing the margin via revenue growth, as well as via cost cuts, and the last year's profit warnings show you how successful that strategy was," said an analyst at a major US bank.

"This time round they just sound more convincing, and it’s clear they see two percent (the full year 2004 target) as a floor, and it’s where most expectations were anyway."

© AFP

Subject: French News

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